consolidated and separate financial...

AS VALMIERAS STIKLA ŠĶIEDRA GENERAL INFORMATION ABOUT THE COMPANY AND THE GROUP

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CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS for the year 2017

Prepared in accordance with International Financial Reporting Standards as adopted by the European Union and include Independent Auditors’ Report*

* This version of financial statements is a translation from the original, which was prepared in Latvian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, the original language version of financial statements takes precedence over this translation.

AS VALMIERAS STIKLA ŠĶIEDRA CONTENT

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GENERAL INFORMATION ABOUT THE COMPANY AND THE GROUP 3

MANAGEMENT REPORT 4 STATEMENT OF MANAGEMENT RESPONSIBILITIES 8 FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION 9 STATEMENT OF COMPREHENSIVE INCOME 11 STATEMENT OF CHANGES IN EQUITY 12 STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS

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14 INDEPENDENT AUDITORS' REPORT

AS VALMIERAS STIKLA ŠĶIEDRA GENERAL INFORMATION ABOUT THE COMPANY AND THE GROUP

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Parent company name VALMIERAS STIKLA ŠĶIEDRA Legal form Joint Stock Company (AS) Registration number, place and date 4000 3031 676

Riga, 30 September 1991 Type of business Production of glass fibre products Address 13 Cempu Street,

Valmiera, LV- 4201 Latvia

Subsidiaries Valmiera Glass UK Ltd (100%)

Sherborne, Dorset DT9 3RB United Kingdom P-D Valmiera Glass USA Corp. (67%) 168 Willie Paulk Parkway, Dublin, GA 31021, United States of America Valmiera Glass USA Trading Corp. (100%) 168 Willie Paulk Parkway, Dublin, GA 31021, United States of America

The board Chairman of the Board: Andre Heinz Schwiontek Members of the Board: Dainis Šēnbergs (till 31 July 2017) Stefan Jugel Doloresa Volkopa

The council Chairman of the Council: Heinz-Jürgen Preiss-Daimler Members of the Council: Hans Peter Cordts Frank Wilhelm Behrends Andris Oskars Brutāns Jöran Pfuhl

Reporting year 1 January 2017 – 31 December 2017 Prior reporting year 1 January 2016 - 31 December 2016 Auditors and their address Deloitte Audits Latvia SIA

Licence No. 43 4a Grēdu Street, Riga, LV-1019, Latvia

AS VALMIERAS STIKLA ŠĶIEDRA MANAGEMENT REPORT

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GENERAL INFORMATION

VALMIERAS STIKLA ŠĶIEDRA, AS and its subsidiaries (hereinafter – VALMIERA GLASS GROUP or the GROUP) is one of the leading glass fibre manufacturers in Europe, with more than 50 years of experience in the production of glass fibre. VALMIERA GLASS GROUP's core business areas are glass fibre research, glass fibre product development, production and trade.

During the reporting period VALMIERA GLASS GROUP consisted of the parent company VALMIERAS STIKLA ŠĶIEDRA, AS and its subsidiaries VALMIERA GLASS UK Ltd. in the United Kingdom, P-D VALMIERA GLASS USA Corp. and VALMIERA GLASS USA Trading Corp. in the United States of America.

VALMIERA GLASS GROUP is the only group in the world with a vertically integrated structure and a wide range of glass fibre products for the thermal insulation market, with a temperature resistance up to 1250°C.

The GROUP’s holding company VALMIERAS STIKLA ŠĶIEDRA, AS specializes in manufacturing glass fibre and glass fibre products using three different types of glass: E-glass with a temperature resistance of 600+°C, HR-glass with a temperature resistance of 800+°C and SiO2-glass with a temperature resistance of 1000+°C. The glass fibre production of VALMIERAS STIKLA ŠĶIEDRA, AS is used for further processing, in technical (electrical, thermal and acoustic) insulation materials and as finished materials in mechanical engineering, construction, and elsewhere.

The subsidiary VALMIERA GLASS UK Ltd. produces glass fibre products for the aviation industry, thermal insulation applications and architecture, and the subsidiary P-D VALMIERA GLASS USA Corp. manufactures glass fibre and specific glass fibre products mainly as a raw material for the manufacturing of other glass fibre products.

The holding company’s VALMIERAS STIKLA ŠĶIEDRA, AS shareholders Corvalis GmbH and P-D Composites Handels-und Service GmbH concluded a Share Purchase Contract during the reporting period, where Corvalis GmbH will sell owned shares to P-D Composites Handels-und Service GmbH in certain period of time.

On February 26, 2018 by the decision of the Financial and Capital Market Commission of February 20, 2018, holding company’s VALMIERAS STIKLA ŠĶIEDRA, AS shareholders Heinz-Jürgen Preiss-Daimler and Beatrix Preiss-Daimler made a mandatory bid’s offer. After the mandatory bid, Beatrix Preiss-Daimler owns 9% of holding company’s shares.

MARKETS

In 2017, products manufactured by VALMIERAS STIKLA ŠĶIEDRA AS, the parent company of the GROUP, were exported to 46 countries across the world with the share of exports reaching 97%. The GROUP continued to strengthen its position on the global glass fibre market in all key sales markets. The key sales markets of the GROUP have remained the same: countries of the European Union (70%), North America (10%), CIS (4%) and other export countries (16%).

Across product segments, sales volumes increased for E-glass fibre raw materials and technical fabrics with thermal resistance of 600+°C, as well as for the high-content SiO2 glass fibre products with thermal resistance of 1000+°C. In 2017, the sales of these products increased on average by 20 % compared to 2016. In other product segments, the sales volumes are considered as stable.

EMPLOYEES

On 31 December 2017 the VALMIERA GLASS GROUP employed 1426 employees, of which the number of employees employed by AS VALMIERAS STIKLA ŠĶIEDRA was 1084. The subsidiary company VALMIERA GLASS UK Ltd. employed 134 employees and the subsidiary in USA - P-D VALMIERA GLASS USA Corp. had on 31 December 2017 already 238 employees.

INVESTMENTS

The focus of investments in 2017 was on the construction of the US investment. As of 31 December 2017, EUR 75.2 million were invested in plant II USA. The Latvian site and the plant in the UK had to


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withstand this, so they only carried out maintenance investments on a small scale. Due to problems with the import of equipment, the plant in the USA was started in January 2018 with a delay of approx. 6 weeks. The plant is currently being ramped up. Planned performance is likely to hit in the beginning of the third quarter of 2018, with a 12-week delay.

QUALITY MANAGEMENT

All the companies of the VALMIERA GLASS GROUP operate in accordance with the Quality Management System Standard ISO 9001:2015. VALMIERAS STIKLA ŠĶIEDRA AS, the parent company of VALMIERA GLASS GROUP, is certified in accordance with the requirements of the Energy Management Standard ISO 50001 and the Environment Management Standard ISO 14001:2004.

FINANCIAL RESULTS

The consolidated net sales of the GROUP in the year 2017 has reached EUR 125.9 Million. Compared to the sales of the GROUP in the year 2016 it has increased by EUR 1.1 Million, as a result of the lack of availability of purchased materials and the late reach of the planned capacity of the melting furnaces in the financial year. In general, the demand situation was such that the planned turnover could be achieved if the production goals were also achieved.

The consolidated operating profit (EBITDA) was EUR 19.6 Million and that is EUR 1.78 Million or 9% more than in the year 2016. The EBITDA margin increased as well to 15.5% from 14% last year. The earnings before interest and taxes (EBIT) reached EUR 8.48 Million and that is EUR 1.2 Million higher than in the year 2016.

The consolidated operating profit margin ratio in the year 2017 was 6.7 %, as a sign of the strong market situation and a result of the cost-saving programs and efficiency program. Consolidated Pre-tax profit reached EUR 8.6 Million in 2017 marking a strong growth of EUR 3.8 million from EUR 4.7 million in 2016.

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The consolidated return on capital (ROCE) in the year 2017 was 0.1%, due to the classification of the credit facilities as current liabilities at the time of 31st of December by the auditors’. The consolidated net profit of the GROUP in the year 2017 was EUR 8.2 million, or EUR 3.4 million higher compared to the audited net profit of the GROUP in the year 2016. This result was achieved through the excellent sales conditions and the associated higher average prices. The higher output of furnaces and the consistent management of costs also made a significant contribution.

Nevertheless, the budgets could not be fully achieved. The main reasons for this were the material shortage in purchasing and the failure to meet the planned melt quantities due to technical problems, which were partly caused by external influences.

Due to continued strong demand in the fiberglass market and availability of the new capacity in the US, the Company expects a strong increase in sales to EUR 162.4 million in 2018. The plant was started in January 2018 and produced after the first initial difficulties since middle of March sellable goods. The installed capacities of 50,000 tons are to be fully utilized by the end of the year.

Taking into account the start-up costs in the first half of 2018, EBITDA will increase to EUR 23.6 million. Due to the borrowing to finance the investment of EUR 55 million and the associated financing costs, the net profit in 2018 will temporarily narrow to EUR 4.7 million. Only with full use of capacity in the following years will the high investment be reflected in an acceptable net result.

STOCK MARKET

The shares of VALMIERAS STIKLA ŠĶIEDRA, AS have been listed on the Nasdaq Riga Secondary List since 24 February 1997.

VALMIERAS STIKLA ŠĶIEDRA, AS share price development in the year 2017 (data of Nasdaq Riga):

During the year of 2017, the share price grew by 18.97%. In the reporting period, the share price fluctuated between EUR 2.92 (lowest share price) and EUR 3.93 (highest share price). In this period, the weighted average share price was EUR 3.50.

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The number of shares traded during the year of 2017 exceeded 311 thousand, and the turnover of shares of VALMIERAS STIKLA ŠĶIEDRA, AS reached EUR 1.09 million. During the reporting period, 1003 transactions were made with shares of VALMIERAS STIKLA ŠĶIEDRA, AS.

VALMIERAS STIKLA ŠĶIEDRA, AS share price in the year 2017 in comparison with OMX Baltic Benchmark GI and OMX Riga index (data Nasdaq Riga):

The accompanying notes on pages 14 to 38 are an integral part of these financial statements. The financial statements were signed on 23 April 2018 on the Company’s behalf by:

Andre Heinz Schwiontek Stefan Jugel Member of the Board Member of the Board

AS VALMIERAS STIKLA ŠĶIEDRA STATEMENT OF MANAGEMENT RESPONSIBILITIES

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The management of AS VALMIERAS STIKLA ŠĶIEDRA (further referred to as “the Company”) is responsible for the preparation of the financial statements of the Company and its subsidiaries (further referred to as “the Group”).

The financial statements are prepared in accordance with the source documents and present fairly the financial position of the Company and the Group as of 31 December 2017 and the results of their operations and cash flows for the year then ended. The management confirms that appropriate accounting policies have been used and applied consistently, and reasonable and prudent judgments and estimates have been made in the preparation of the financial statements. The management also confirms that the requirements of International Financial Reporting Standards as adopted by the EU have been complied with and that the financial statements have been prepared on a going concern basis.

The management of the Group is also responsible for maintaining proper accounting records, for taking reasonable steps to safeguard the assets of the Company and the Group and to prevent fraud and fraudulent activities, and other irregularities.

23 April 2018 On the Company’s behalf by:

Andre Heinz Schwiontek Stefan Jugel Member of the Board Member of the Board

AS VALMIERAS STIKLA ŠĶIEDRA

Notes31.12.17. 31.12.16. 31.12.17. 31.12.16.

EUR EUR EUR EURASSETSNON-CURRENT ASSETSIntangible assetsSoftware, licences, patents, trade marks, similar rights 4 973 318 869 605 891 188 869 605Software in acquisition process 4 14 700 - 14 700 -Goodwill 5 3 692 694 3 826 612 - - Total intangible assets 4 680 712 4 696 217 905 888 869 605

Property, plant and equipmentLand and buildings 6 15 761 318 17 243 174 11 281 645 11 986 984Equipment and machinery 6 54 939 092 60 432 169 49 845 789 54 185 137Other fixed assets 6 1 035 040 1 158 916 794 236 842 693Construction in progress 6 69 258 750 5 952 882 204 798 4 271 168Advance payments for fixed assets 13 163 704 348 704 449 975 290 994Total property, plant and equipment 154 157 903 85 135 845 62 576 443 71 576 976

Non-current financial investments Investments in subsidiaries 5 - - 29 974 974 15 502 974Loans to subsidiaries 33 - - 30 358 012 3 798 620Receivables from related companies 33 - - - 3 123 773Deferred expenses 11 206 831 235 322 - - Total non-current financial investments 206 831 235 322 60 332 986 22 425 367

Deferred tax asset 30 1 185 747 1 923 581 - - Total non-current assets 160 231 193 91 990 965 123 815 317 94 871 948

CURRENT ASSETS

Inventories Raw materials 7 9 114 716 10 480 108 7 482 361 8 880 818Work in progress 5 110 754 5 101 281 4 662 723 4 656 039Finished goods 8 12 702 827 17 095 254 5 557 952 9 195 641Advance payments for inventories 177 455 300 805 131 574 181 681Total inventories 27 105 752 32 977 448 17 834 610 22 914 179

Debtors Trade receivables 9 11 948 523 10 118 616 6 008 184 4 835 448Receivables from subsidiaries 33 - - 23 649 592 5 270 730Amounts due from related parties 33 337 091 971 131 319 336 971 136Other receivables 10 4 311 953 1 057 173 4 129 619 667 024Deferred expenses 11 777 887 788 516 391 117 732 506Total debtors 17 375 454 12 935 436 34 497 848 12 476 844

Cash and cash equivalents 12 2 633 591 2 958 952 304 401 161 062

Total current assets 47 114 797 48 871 836 52 636 858 35 552 085

TOTAL ASSETS 207 345 990 140 862 800 176 452 173 130 424 033

The accompanying notes on pages 14 to 38 are an integral part of these financial statements.

The financial statements were signed on 23 April 2018 on the Company’s behalf by:

Andre Heinz SchwiontekChairman of the Board

Stefan JugelMember of the Board

STATEMENT OF FINANCIAL POSITION OF THE GROUP AND THE COMPANYAT 31 DECEMBER 2017

Group Company

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Notes31.12.17. 31.12.16. 31.12.17. 31.12.16.

LIABILITIES AND EQUITY EUR EUR EUR EUR

SHAREHOLDERS' EQUITYShare capital 13 33 464 487 33 464 487 33 464 487 33 464 487 Foreign currency translation reserve (3 084 475) (257 191) - - Other reserves (3 145 849) (3 418 157) 546 709 546 709 Retained earnings

Profit brought forward 24 044 472 19 237 518 21 334 538 18 894 565 Profit for the current reporting year 8 216 113 4 806 954 5 415 207 2 439 974

Total equity attributable to owners of the parent

59 494 748 53 833 610 60 760 941 55 345 735

Non-controling interest 7 642 772 1 056 658 - - Total equity 67 137 520 54 890 268 60 760 941 55 345 735

LIABILITIESNon-current liabilitiesBorrowings from credit institutions 14 370 748 25 928 430 - 25 928 430 Borrowings from subsidiaries 33 - - 2 316 705 2 700 000 Borrowings from other related parties 33 2 850 884 - 2 850 884 - Finance lease 15 9 817 65 907 9 817 65 907 Finance lease from related parties 33 86 875 164 000 86 875 164 000 Other borrowings 16 1 245 965 1 620 204 - - Deferred tax liabilities 30 676 831 2 917 078 - 2 620 915 Defined benefit obligation 20 5 282 734 6 713 542 - - Deferred income 21 4 218 087 4 727 469 2 699 149 3 079 934 Derivative 34 137 543 431 006 137 543 431 006 Total non-current liabilities 14 879 483 42 567 636 8 100 973 34 990 192

Current liabilitiesBorrowings from credit institutions 14 83 336 950 23 534 569 82 819 969 23 138 575 Finance lease 15 56 453 68 804 56 453 68 804 Finance lease from related parties 33 95 460 111 000 95 460 111 000 Other borrowings 16 178 080 202 610 - - Advance payments from customers 323 468 121 902 260 612 107 340 Trade payables 33 123 510 12 933 845 17 596 365 11 648 562 Payables to subsidiaries 33 - - 1 189 782 816 630 Payables to other related parties 33 1 499 342 814 585 1 046 045 812 297 Taxes and social security contributions 17 2 251 251 1 081 115 1 923 249 771 688

Other accounts payable 18 946 851 1 001 015 799 088 812 590 Accrued liabilities 19 2 073 179 2 104 964 1 422 452 1 419 836 Defined benefit obligation 20 958 038 992 782 - - Deferred income 21 486 406 437 705 380 784 380 784 Total current liabilities 125 328 988 43 404 896 107 590 259 40 088 106

Total liabilities 140 208 471 85 972 532 115 691 232 75 078 298

Total equity and liabilities 207 345 990 140 862 800 176 452 173 130 424 033



Andre Heinz Schwiontek

Chairman of the Board

Stefan Jugel

Member of the Board

STATEMENT OF FINANCIAL POSITION OF THE GROUP AND THE COMPANYAT 31 December 2017

Group Company

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Notes2017 2016 2017 2016 EUR EUR EUR EUR

Sales 22 125 863 712 124 813 876 104 038 817 101 413 172Change in inventories (1 562 780) 3 513 231 (3 455 709) 2 062 749

Costs capitalized to non-current assets 6 2 089 341 373 928 31 478 262 351Other operating income 23 1 888 490 1 061 603 1 741 537 2 076 879Raw materials and consumables 24 (62 292 671) (67 309 367) (53 132 089) (58 150 885)Personnel expenses 25 (28 395 270) (26 682 389) (20 046 966) (19 640 817)Depreciation and amortization 26 (11 124 339) (10 548 173) (10 153 882) (9 321 099)Other operating expenses 27 (17 986 763) (17 952 462) (13 994 376) (14 503 842)

Profit from operations 8 479 718 7 270 247 5 028 811 4 198 508Interest and similar income 28 320 541 735 380 311 216 832 929Interest and similar expenses 29 (1 533 639) (1 609 794) (2 545 735) (1 321 463)Profit before tax 7 266 620 6 395 833 2 794 292 3 709 974Corporate income tax 30 1 374 462 (1 626 580) 2 620 915 (1 270 000)Profit for the year 8 641 082 4 769 253 5 415 207 2 439 974

Attributable to:Non-controlling interest 424 969 (37 701) - -Owners of the Parent 8 216 113 4 806 954 5 415 207 2 439 974

Earnings per share 31 0,3437 0,2011 0,2265 0,1021

Remeasurement of defined benefit obligation 20 340 385 (3 084 349) - - Deferred income tax relating to defined benefit obligation 30 - 68 077

617 924 - -

Exchange differences on translating foreign operations (2 827 284) (2 199 820) - - Other comprehensive income for the year, attributable to owners of the Parent

(2 554 976) (4 666 245) - -

Exchange differences on translating foreign operations attributable to non-controlling interest

(1 258 745) 12 319 - - Total other comprehensive income (3 813 721) (4 653 926)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 4 827 361 115 327 5 415 207 2 439 974





STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME OF THE GROUP AND THE COMPANY

Group Company

Other comprehensive income

FOR THE YEAR 2017

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Group

Share capitalRevaluation

reserveOther reserve

Retained earnings

TotalNon-

controling interest

Total equity

EUR EUR EUR EUR EUR EUR EUR31.12.15. 33 464 487 1 942 629 (951 732) 20 737 699 55 193 083 - 55 193 083

Current year profit - - - 4 806 954 4 806 954 (37 701) 4 769 253

Sale of non-controlling interest - - - 145 482 145 482 1 082 040 1 227 522

Payment of dividends - - - (1 645 663) (1 645 663) - (1 645 663)

Other comprehensive income:Remeasurement of defined benefit obligation - - (3 084 349) - (3 084 349) - (3 084 349)Deferred income tax relating to defined benefit obligation - - 617 924 - 617 924 - 617 924 Exchange differences on translating foreign operations - (2 199 820) - - (2 199 820) 12 319 (2 187 501)

31.12.16. 33 464 487 (257 191) (3 418 157) 24 044 472 53 833 611 1 056 658 54 890 269

Current year profit - - - 8 216 112 8 216 112 424 969 8 641 081

Contributions from non-controlling interest - - - - - 7 419 890 7 419 890

Other comprehensive income:Remeasurement of defined - - 340 385 - 340 385 - 340 385 Deferred income tax relating to defined benefit obligation - - (68 077) - (68 077) - (68 077)Exchange differences on translating foreign operations - (2 827 284) - - (2 827 284) (1 258 745) (4 086 029)

31.12.17. 33 464 487 (3 084 475) (3 145 849) 32 260 584 59 494 747 7 642 772 67 137 520

Company

Akciju kapitāls

Pārējās rezerves

Nesadalītā peļņa

Kopā

EUR EUR EUR EUR31.12.15. 33 464 487 546 709 20 540 227 54 551 423

Payment of dividends - - (1 645 663) (1 645 663)

Current year profit - - 2 439 974 2 439 974

31.12.16. 33 464 487 546 709 21 334 538 55 345 735

Current year profit - - 5 415 207 5 415 207

31.12.17. 33 464 487 546 709 26 749 745 60 760 942





STATEMENT OF CHANGES IN EQUITY OF THE GROUP AND THE COMPANYFOR THE YEAR 2017

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Group Company

Notes 2017 2016 2017 2016 EUR EUR EUR EUR

Cash flows from operating activitiesProfit before tax 7 266 620 6 395 833 2 794 292 3 709 974Adjustments:Change in fair value of derivative 28 (293 463) (333 500) (293 463) (333 500)Depreciation and amortization 26 11 124 339 10 548 173 10 153 882 9 321 099Profit from disposal of fixed assets - - (55 354) - Loss from investing in related parties sales 5 - - - 30 992Interest expenses 29 1 359 917 1 394 575 1 311 934 1 290 471 Interest income 28 (27 077) (121 902) (17 753) (111 875)Income on EU grants 23 (923 355) (687 124) (396 361) (477 194)Changes in working capital:(Increase) / decrease in inventories 5 871 696 (2 215 293) 5 079 569 (2 026 925)(Decrease) / Increase in accounts receivable (4 093 943) 732 679 (14 269 837) (129 583)

Increase in accounts payable 6 686 681 (1 590 287) 6 946 096 1 280 592

Cash provided by operating activities 26 971 415 14 123 154 11 253 005 12 554 051

Cash flows from investing activitiesPurchase of fixed and intangible assets (70 634 723) (13 646 505) (1 541 350) (11 811 278)Investments in share capital of subsidiaries - - (14 472 000) - Loans to related parties - - (30 358 012) - Income from sales of fixed assets - - 512 142 -

Income from sales of investment in related party shares - 1 186 159 - 1 186 159

Received interest 27 077 121 902 17 753 111 875Net cash used in investing activities (70 607 646) (12 338 444) (45 841 467) (10 513 244)

Cash flows from financing activities

Income from non-controlling interest contribution 7 419 890 - - -

Dividends paid - (1 645 663) - (1 645 663)Loans received 52 700 214 7 714 386 42 263 848 7 617 121Loans paid (11 467 480) (8 807 618) (10 458 226) (9 278 448)Change in credit line (4 535 919) 2 738 509 4 414 931 2 342 515Finance lease paid (161 106) (116 313) (161 106) (116 313)Paid interest expenses (1 494 125) (1 394 575) (1 343 223) (1 290 471)Received EU and state grants 849 396 1 485 312 15 576 429 740Net cash (used in) / provided by financing activities 43 310 870 (25 962) 34 731 800 (1 941 519)

Net change in cash and cash equivalents (325 361) 1 758 748 143 338 99 288Cash and cash equivalents at the beginning of reporting period 2 958 952 1 200 204 161 062 61 774Cash and cash equivalents at the end of reporting period 12 2 633 591 2 958 952 304 400 161 062





STATEMENT OF CASH FLOWS OF THE GROUP AND THE COMPANYFOR THE YEAR 2017

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1. GENERAL INFORMATION

2. BASIS OF PREPARATION OF FINANSIAL STATEMENT

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NOTES TO THE FINANCIAL STATEMENTS OF THE GROUP AND THE COMPANYFOR THE YEAR 2017

Initial application of new amendments to the existing standards effective for the current reporting period

IFRS 9 “Financial Instruments” - adopted by the EU on 22 November 2016 (effective for annual periods beginning on orafter 1 January 2018),

IFRS 15 “Revenue from Contracts with Customers” and amendments to IFRS 15 “Effective date of IFRS 15” -adopted by the EU on 22 September 2016 (effective for annual periods beginning on or after 1 January 2018),IFRS 16 “Leases” – adopted by the EU on 31 October 2017 (effective for annual periods beginning on or after 1 January2019),

Amendments to IFRS 2 “Share-based Payment” - Classification and Measurement of Share-based PaymentTransactions – adopted by the EU on 27 February 2018 (effective for annual periods beginning on or after 1 January 2018),

Amendments to IFRS 4 “Insurance Contracts” - Applying IFRS 9 Financial Instruments with IFRS 4 InsuranceContracts – adopted by the EU on 3 November 2017 (effective for annual periods beginning on or after 1 January 2018 orwhen IFRS 9 “Financial Instruments” is applied first time),

Amendments to IFRS 15 “Revenue from Contracts with Customers” - Clarifications to IFRS 15 Revenue fromContracts with Customers – adopted by the EU on 31 October 2017 (effective for annual periods beginning on or after 1January 2018),Amendments to IAS 40 “Investment Property” - Transfers of Investment Property – adopted by the EU on 14 March2018 (effective for annual periods beginning on or after 1 January 2018),Amendments to IFRS 1 and IAS 28 due to “Improvements to IFRSs (cycle 2014 -2016)” resulting from the annualimprovement project of IFRS (IFRS 1, IFRS 12 and IAS 28) primarily with a view to removing inconsistencies andclarifying wording – adopted by the EU on 7 February 2018 (amendments to IFRS 1 and IAS 28 are to be applied for annualperiods beginning on or after 1 January 2018),IFRIC 22 “Foreign Currency Transactions and Advance Consideration” – adopted by the EU on 28 March 2018(effective for annual periods beginning on or after 1 January 2018).

AS Valmieras stikla šķiedra is registered as a joint stock company in the Commercial Register of the Republic of Latvia. Theprincipal activity of the Group is production and trade of fibreglass and fibreglass products.

The Group consists of parent company AS Valmieras stikla šķiedra and its 100% owned subsidiaries Valmiera Glass UK(previously – P-D Integrlas Technologies Ltd.), Valmiera Glass USA Corporation and Valmiera Glass USA Trading Corporation. The principal activity of the Group is production and trade of fibreglass and fibreglass products.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) asadopted by the European Union (the EU) and their interpretations. The standards are issued by the International AccountingStandards Board (IASB) and their interpretations by the International Financial Reporting Interpretations Committee (IFRIC). The financial statements have been prepared on the historical cost basis except for certain financial instruments that aremeasured at fair values.

The following amendments to the existing standards and new interpretation issued by the International Accounting StandardsBoard (IASB) and adopted by the EU are effective for the current reporting period:

Standards and amendments to the existing standards issued by IASB and adopted by the EU but not yet effective

At the date of authorisation of these financial statements, the following new standards issued by IASB and adopted by the EU are not yet effective:

The adoption of these amendments to the existing standards has not led to any material changes in the Group’s financial statements.

Amendments to IAS 7 “Statement of Cash Flows” - Disclosure Initiative – adopted by EU on 6 November 2017(effective for annual periods beginning on or after 1 January 2017),

Amendments to IAS 12 “Income Taxes” - Recognition of Deferred Tax Assets for Unrealised Losses – adopted by EUon 6 November 2017 (effective for annual periods beginning on or after 1 January 2017),Amendments to IFRS 12 due to “Improvements to IFRSs (cycle 2014 - 2016)” resulting from the annualimprovement project of IFRS (IFRS 1, IFRS 12 and IAS 28) primarily with a view to removing inconsistencies andclarifying wording – adopted by the EU on 7 February 2018 (amendments to IFRS 12 are to be applied for annual periodsbeginning on or after 1 January 2017),

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31.12.2017 31.12.2016GBP 0.88723 0.85618RUB 69.3920 64.3000SEK 9.84380 9,5525CHF 1.1702 1.0739USD 1.1993 1.0541

The accompanying financial statements are presented in the currency of the European Union, the Euro (hereinafter – EUR), which is theCompany’s functional and presentation currency. The functional currencies of subsidiaries are GBP and USD.

In preparing the financial statements of each individual group entity, transactions in currencies other than the company’s functionalcurrency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period,monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences onmonetary items are recognised in profit or loss in the period in which they arise.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group's foreign subsidiaries aretranslated into EUR using exchange rate prevailing at the end of each reporting period. Income and expense items are translated at theaverage exchange rates for the period. Exchange differences arising are recognised in other comprehensive income and accumulatedin equity as Foreign currency translation reserves.All transactions and balances in foreign currencies are converted into euro after the European Central Bank exchange rate. FinancialReporting currency rates for 1 EUR:

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions betweenmembers of the Group are eliminated in full on consolidation.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

The consolidated financial statements incorporate the financial statements of the Group and entities controlled by the Group and its subsidiaries. Control is achieved when the Group has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns.

Basis of consolidation

ACCOUNTING POLICIES

Foreign currencies

Amendments to IAS 19 “Employee Benefits” - Plan Amendment, Curtailment or Settlement (effective for annual periodsbeginning on or after 1 January 2019),

FOR THE YEAR 2017

The Group has elected not to adopt these new standards and amendments to existing standards in advance of their effective dates. TheGroup is in the process of assessment of potential impact of the adoption of IFRS 15 and IFRS 16 on the financial statements of the Group in the period of initial application.

Hedge accounting for a portfolio of financial assets and liabilities whose principles have not been adopted by the EU remains unregulated.

According to the Group’s estimates, the application of hedge accounting to a portfolio of financial assets or liabilities pursuant to IAS 39:“Financial Instruments: Recognition and Measurement” would not significantly impact the financial statements, if applied as at the balancesheet date.

The Group anticipates that the adoption of these new standards, amendments to the existing standards and new interpretations will haveno material impact on the financial statements of the Group in the period of initial application.

Amendments to various standards due to “Improvements to IFRSs (cycle 2015 -2017)” resulting from the annualimprovement project of IFRS (IFRS 3, IFRS 11, IAS 12 and IAS 23) primarily with a view to removing inconsistencies andclarifying wording (effective for annual periods beginning on or after 1 January 2019).

Amendments to IAS 28 “Investments in Associates and Joint Ventures” - Long-term Interests in Associates and JointVentures (effective for annual periods beginning on or after 1 January 2019),

IFRIC 23 “Uncertainty over Income Tax Treatments” (effective for annual periods beginning on or after 1 January 2019).

NOTES TO THE FINANCIAL STATEMENTS OF THE GROUP AND THE COMPANY

New standards and amendments to the existing standards issued by IASB but not yet adopted by the EU

At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International Accounting Standards Board(IASB) except for the following new standards, amendments to the existing standards and new interpretation, which were not endorsed foruse in EU as of the date of publication of financial statements:

IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1 January 2016) - the EuropeanCommission has decided not to launch the endorsement process of this interim standard and to wait for the final standard,

IFRS 17 “Insurance Contracts” (effective for annual periods beginning on or after 1 January 2021),

Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” -Sale or Contribution of Assets between an Investor and its Associate or Joint Venture and further amendments (effective datedeferred indefinitely until the research project on the equity method has been concluded),

15


4-6.7%6.7-25%10-40%

BuildingsEquipment and machineryOther fixed assets

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulatedimpairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units that are expected to benefit from thesynergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequentlywhen there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount,the impairment loss is recognized.

Other intangible assets

Investments in subsidiaries

Investments in subsidiaries in the Company’s separate financial statements are recognized at cost less impairment losses. If the recoverableamount of an investment is lower than its carrying amount, due to circumstances not considered to be temporary, the investment value is writtendown to its recoverable amount.

Intangible assets

Goodwill

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except deferred tax assets orliabilities, and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxesand IAS 19 respectively.

Goodwill is measured as the excess of the sum of the consideration transferred over the fair value of net of the acquisition-date amounts of theidentifiable assets acquired and the liabilities assumed.


Changes in the Group’s ownership interests in existing subsidiaries

Acquisitions of businesses, including acquisitions under common control in situations the common control transaction has commercialsubstance, are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value,which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to theformer owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs aregenerally recognised in profit or loss as incurred.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted asequity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect changes in theirrelative interests in the subsidiaries. Any difference between the amounts by which the non-controlling interests are adjusted and the fair valueof the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

Business combinations

Software licences and patents are stated at historical cost less accumulated amortisation and accumulated impairment losses. Amortisation ofthe assets is calculated using the straight-line method to allocate their cost over their estimated useful lives. Generally the software licences andpatents are amortised over a period of 3 to 10 years.

Tangible fixed assets

Tangible fixed assets are stated at historical cost less accumulated depreciation and impairment loss, if any. Historical cost includes expenditurethat is directly attributable to the acquisition.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable thatfuture economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amountof the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in whichthey are incurred.

An item of fixed assets is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of theasset. Any gain or loss arising on the disposal is determined as the difference between the sales proceeds and the carrying amount of the assetand is recognized in profit or loss.At each balance sheet date the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there are anyindications that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated inorder to determine the extent of the impairment loss (if any). Where it is not possible to estimate recoverable amount of an individual asset, theGroup estimates the value of cash-generating unit to which the asset belongs.

Precious metal plates, which are used in manufacturing, are classified as fixed assets and depreciated using units of production method based onactual intensity of use. For other fixed assets depreciation is calculated using the straight-line method applying the following annual depreciationrates:

Land is not depreciated.

The estimated annual depreciation rates and depreciation method are reviewed at the end of each reporting period, with the effect of anychanges in estimate accounted for on a prospective basis.

16


•

••

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.Loans and receivables (including trade and other receivables, bank balances and cash and other similar items) are measured at amortisedcost using the effective interest method, less any impairment.

Financial assets

Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss, held-to-maturityinvestments, available for sale financial assets and loans and receivables. This classification depends on the nature and purpose of thefinancial assets and is determined at the time of initial recognition.

Loans and receivables


Recoverable amount is the higher of fair value less costs of sale and value in use. In assessing value in use, the estimated future cashflows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount ofthe asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Inventories

Inventories are stated at the lower of cost and net realizable value. Costs comprise direct materials and, where applicable, direct laborcosts and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculatedusing the weighted average method. Net realizable value represents the estimated selling price less all estimated costs of completion andcosts to be incurred in selling and distribution.

If necessary, allowance is made for obsolete, slow moving and defective stock.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns,rebates and other similar allowances.Revenue from the sale of goods is recognized when all the following conditions are satisfied:

• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;• the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control overthe goods sold;• the amount of revenue can be measured reliably;• it is probable that the economic benefits associated with the transaction will flow to the Group; and• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from services is recognised in the accounting period in which the services are rendered, by reference to completion of thespecific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

Interest income is recognized in the statement of profit and loss on an accrual basis of accounting using the effective interest ratemethod.

Segment information

Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segmentsare components of an entity about which separate financial information is available that is evaluated regularly by the chief operatingdecision maker in deciding how to allocate resources and in assessing performance.

The Group presents the first two components of defined benefit costs in profit or loss in the line item Personnel Expenses and Interestexpense/ income. Remeasurement is recognized in equity as Other reserves.

service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);

net interest expense or income;remeasurement.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitlingthem to the contributions.

For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, withactuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses,the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately inthe statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur.Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified toprofit or loss. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability orasset. Defined benefit costs are categorised as follows:

17


Total payments made under operating leases are charged to the profit and loss statement on a straight–line basis over theperiod of the lease.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of theownership to the lessee. All other leases are classified as operating leases.

If the Group is a lessee in a finance lease arrangement, it recognises in the statement of financial position the assets as an itemof property, plant and equipment and a lease liability measured as the lower of the fair value of the leased property and thepresent value of the minimum lease payments. Each lease payment is allocated between the liability and finance charge so as toachieve a constant interest rate on the balance of liability outstanding. The interest element of the lease payment is charged tothe profit or loss over the lease period. The item of property, plant and equipment acquired under a finance lease is depreciatedover the shorter of the useful life of the asset and the lease term, unless it is reasonably certain that the Group will obtainownership by the end of the lease term.

Based on the new Corporate Income tax law of the Republic of Latvia announced in 2017, starting from 1 January 2018corporate income tax will be applicable to distributed profits and several expenses that would be treated as profit distribution. Incase of reinvestment of profit corporate income tax shall not be applied. The applicable corporate income tax rate has increasedfrom the 15% to 20%.

In accordance with International Accounting Standard No 12 “Income Taxes“ in cases where income tax is payable at a higher orlower rate, depending on whether the profit is distributed, the current and deferred tax assets and liabilities are measured at thetax rate applicable to undistributed profits. In Latvia the applicable rate for undistributed profits is 0%. Therefore, in the deferredtax assets and liabilities related to operations in Latvia are released to income statement for 2017.

Leases


Impairment of loans and receivablesThe Group assesses, at each balance sheet date, whether there is objective evidence that a loan or trade receivable is impaired.The Group assesses each loans and trade receivable on an individual basis. If there is objective evidence that an impairment losson loans and receivables carried at amortized cost has been incurred, the amount of the loss is measured as the differencebetween the asset's carrying amount and estimated present value of future cash flows discounted with original effectiveinterest rate.

Financial liabilities

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

Financial liabilities at fair value through profit or loss The Group enters into certain derivative financial instruments to manage its exposure to interest rate and foreign exchange raterisks, including foreign exchange forward contracts and interest rate swaps. Interest rate swaps are contracts in which a series of interest rate flows in a single currency are exchanged over a prescribedperiod. Interest rate swaps involve the exchange of fixed and floating interest payments. The notional amount on which the Foreign exchange contracts (forwards) are contracts for the future receipt or delivery of foreign currency at previously agreed-upon terms.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequentlyremeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or lossimmediately. The Group does not hold derivative financial instruments which were designated and effective as hedginginstruments.

Borrowings and trade payablesBorrowings and trade payables are initially measured at fair value, net of transaction costs.Loans and trade payables are subsequently measured at amortized cost using the effective interest rate method.

Current tax assets and tax liabilities for current and previous periods are measured at the amount expected to be obtained fromor paid to tax authorities. Deferred taxes refer to tax on differences between the carrying amount and the tax base, which in thefuture serves as the basis for current tax. Deferred tax liabilities are the tax attributable to taxable temporary differences andare expected to be paid in the future. Deferred tax liabilities are recognised on all taxable temporary differences, Deferred taxassets represent a reduction in the future tax attributable to deductible temporary differences, tax loss carry-forwards or otherfuture taxable deductions. Deferred tax assets are tested on each closing period and recognised to the extent it is likely on eachclosing day that they can be utilised. As a result, a previously unrecognised deferred tax asset is recognised when it isconsidered likely that a sufficient surplus will be available in the future. Tax rates which have been enacted or substantivelyenacted as of the reporting date are used in the calculations. The Group’s deferred tax assets and tax liabilities are estimated atnominal value using country’s tax rate in effect in subsequent years. Deferred tax assets are netted against deferred taxliabilities for Group entities that have offsetting rights. All current and deferred taxes are recognised in profit or loss as Tax, withthe exception of tax attributable to items that are recognised directly in other comprehensive income or equity.

The effective interest rate method provides financial liabilities calculating the amortized cost and interest income over therelevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through theexpected life of the financial liability, or a shorter period.

Deferred and current tax

18


The Group’s management determines net deficit in defined benefit pension plan based on an assessment carried out by independentactuary. The most significant assumptions used in this assessment are the expected return on pension plan assets, pension growth rateand discount rate.

Defined benefit pension plans

The Group’s management evaluates the carrying amount of trade receivables on individual basis and assesses their recoverability, makingan allowance for doubtful trade receivables, if necessary. The Group’s management has evaluated the trade receivables and considers thatallowances provided are sufficient to cover the impairment loss as of 31 December 2017.

Allowance for doubtful trade receivables

The Group’s management evaluates the net realisable value of inventories based upon the expected sales prices and selling costs andassesses the physical condition of inventories during the annual stock count. If the net realisable value of inventories is lower than the costof inventories, allowance is recorded. The Group’s management has evaluated the net realisable value of inventories and considers that it isnot necessary to make an additional significant allowance as of 31 December 2017.

Net realisable value of inventories

The Group assesses the availability of taxable profits during the period when tax losses and tax discounts carried forward can be used (seeNote 30). The Group reviews the deferred tax asset at each balance sheet date and reduces it to the extent that it is no longer probable thatsufficient taxable profit will be available during the period when tax loss and discounts can be carried forward to use the deferred tax asset.

Recoverability of deferred tax assets on tax loss carried forward

The Group’s management reviews the carrying amounts of property, plant and equipment and assesses whenever indications exist that theassets’ recoverable amounts are lower than their carrying amounts. The Group’s management calculates and records an impairment loss onproperty, plant and equipment based on the estimates related to the expected future use, planned liquidation or sale of the assets. Takinginto consideration the Group’s planned level of activities and the estimated market value of the assets, the Group’s management considersthat no significant adjustments to the carrying values of property, plant and equipment are necessary as of 31 December 2016.

The carrying amounts of property, plant and equipment

Useful lives of property, plant and equipment are assessed at each balance sheet date and changed, if necessary, to reflect the Group’smanagement current view on their remaining useful lives in the light of changes in technology, the remaining prospective economic use ofthe assets and their physical condition.

Recoverable amount of goodwillGoodwill is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. Determiningwhether goodwill is impaired requires the management to estimate the future cash flows expected to arise from the cash-generating unit.Where the actual future cash flows are less than expected, a material impairment loss may arise.

Useful lives of property, plant and equipment

The following are the critical judgments and key estimates concerning the future, and other key sources of estimation uncertainty whichexist at the reporting date of the financial statements that have a significant risk of causing a material adjustment to the carrying amountsof assets and liabilities during the next reporting period:

The preparation of financial statements requires management to make estimates and assumptions. These estimates and assumptionsaffect the reported amounts of assets, liabilities and off statements of financial position items, as well as reported revenues and expenses.Actual results could differ from those estimates.

Use of estimates and critical accounting judgments

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions related to themand that the grants will be received.Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets arerecognized as deferred income in the statements of financial position and transferred to profit or loss on a systematic and rational basisover the useful lives of the related assets.

Other government grants are recognized as income over the periods necessary to match them with the costs for which they are intendedto compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred orfor the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the periodin which they become receivable.


Borrowing costs

Cash and cash equivalents

Cash and cash equivalents include cash in bank and demand deposits with credit institutions with initial term which does not exceed 90days.

Government grants

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarilytake a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until the assets aresubstantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

19


4. INTANGIBLE ASSETS

Group

Software licenses, patents,

trademarks and other rights

Software in acquisition

processTotal

EUR EUR EURCOST31.12.15. 965 829 107 912 1 073 741Additions 247 015 - 247 015Disposed (107 399) - (107 399)Transfers 107 912 (107 912) - 31.12.16. 1 213 357 - 1 213 357Additions 87 567 147 489 235 056Disposed (18 356) - (18 356)Transfers 132 789 (132 789) - 31.12.17. 1 415 357 14 700 1 430 057

ACCUMULATED DEPRECIATION31.12.15. 363 554 - 363 554Charged 87 597 - 87 597Disposed (107 399) - (107 399)31.12.16. 343 752 - 343 752Charged 116 643 - 116 643Disposed (18 356) - (18 356)31.12.17. 442 039 - 442 039

Carrying value31.12.16. 869 605 - 869 60531.12.17. 973 318 14 700 988 018

5. INVESTMENTS IN SUBSIDIARIES AND GOODWILL

The Company is the sole shareholder in the following companies: 31.12.2017 31.12.2016EUR EUR

Valmiera Glass UK Limited (100%) 13 000 000 13 000 000P-D Valmiera Glass USA Corporation (67%) 16 959 079 2 487 079Valmiera Glass 15 895 15 895Total 29 974 974 15 502 974


The Company established subsidiaries Valmiera Glass USA Corporation and Valmiera Glass Trading USA Corporation on9 April 2014. On 31 March, 2015 the Company invested additional US $ 4 000 000 (EUR 3 688 335) in the share capitalof the subsidiary Valmiera Glass USA Corporation.

The Company signed agreement with realated party P-D management Industries-Technologies GmbH on 9 April 2016for sale of 33% of Valmiera Glass USA Corp. shares for total amount of USD 1 326 600 (EUR 1 186 157). As a result, thename of subsidiary in USA was changed P-D Valmiera Glass USA Corp. As during the sale of interest the Group did notlose the control of subsidiary, in consolidated financial statements the result was recognised directly in equity,according with IFRS requirements.

On 10 February 2017 the Company invested additional USD 15 373 606 (EUR 14 472 000) in the share capital of thesubsidiary Valmiera Glass USA Corporation, EUR 7 128 000 was contributed by the non-controling investor inproportion with the shares held by them.

The Company acquired 100% of shares of subsidiary Valmiera Glass UK Limited (formerly named P-D InterglasTechnologies Limited) from related party on 4 October 2013. Cost of acquisition amounted to EUR 13 000 000.

Core business of the subsidiaries is trade and production of fiberglass products.

20


6. TANGIBLE FIXED ASSETS

GroupLand Buildings Equipment and

machineryOther fixed

assetsConstruction in

progressTotal

EUR EUR EUR EUR EUR EURHISTORICAL COST31.12.15. 375 685 35 775 320 129 997 974 5 853 332 4 998 127 177 000 438Impact of currency fluctuation

- (469 522) (2 004 925) (190 902) 79 656 (2 585 693)

Additions 1 200 21 514 - - 16 761 340 16 784 054Disposals - (35 641) (9 165 244) (364 710) - (9 565 595)Transfers - 1 364 030 14 092 647 429 564 (15 886 241) - 31.12.16. 376 885 36 655 701 132 920 452 5 727 283 5 952 882 181 633 203Impact of currency fluctuation - (593 051) (671 053) (127 161) (134 936) (1 526 202)Additions - 3 311 63 147 132 056 68 901 035 69 099 550Disposals - (27 074) (1 149 945) (373 792) - (1 550 811)Transfers - 545 574 4 624 661 289 996 (5 460 231) - 31.12.17. 376 885 36 584 461 135 787 262 5 648 382 69 258 750 247 655 741

ACCUMULATED DEPRECIATION31.12.15. - 18 754 531 74 693 223 4 676 441 - 98 124 195Impact of currency fluctuations

- (486 452) (1 825 915) (176 473) - (2 488 840)

Charge for the year - 1 556 974 8 487 288 429 818 - 10 474 080Disposals - (35 641) (8 866 314) (361 420) - (9 263 375)31.12.16. - 19 789 412 72 488 282 4 568 367 - 96 846 061Impact of currency fluctuations

- (50 934) (85 499) (21 108) - (157 541)

Charge for the year - 1 488 624 9 091 800 432 709 - 11 013 132Disposals - (27 074) (646 413) (366 624) - (1 040 111)31.12.17. - 21 200 028 80 848 170 4 613 343 - 106 661 542NET CARRYING AMOUNT31.12.16. 376 885 16 866 289 60 432 170 1 158 917 5 952 882 84 787 14231.12.17. 376 885 15 384 433 54 939 092 1 035 040 69 258 750 140 994 199

CompanyLand Buildings Equipment and

machineryOther fixed

assetsConstruction in

progressTotal

EUR EUR EUR EUR EURHISTORICAL COST31.12.15. 375685 26 856 410 109 952 940 4 242 700 5 009 280 146 437 015Additions 1 200 - - - 14 849 746 14 850 946Disposals - (35 641) (8 306 685) (364 710) - (8 707 036)Transfers - 1 310 086 13 937 667 340 105 (15 587 858) - 31.12.16. 376885 28 130 855 115 583 922 4 218 095 4 271 168 152 580 925Additions - - - - 1 393 861 1 393 861Disposals - (27 074) (1 273 341) (373 792) - (1 674 207)Transfers - 545 574 4 624 661 289 996 (5 460 231) - 31.12.17. 376 885 28 649 355 118 935 242 4 134 299 204 798 152 300 579

ACCUMULATED DEPRECIATION31.12.15. - 15 300 183 61 809 935 3 401 369 - 80 511 486Charge for the year - 1 256 214 7 641 835 335 453 - 9 233 502Disposals - (35 641) (8 052 984) (361 420) - (8 450 045)31.12.16. - 16 520 756 61 398 785 3 375 402 - 81 294 943Charge for the year - 1 250 913 8 460 477 331 285 - 10 042 675Disposals - (27 074) (769 809) (366 624) - (1 163 507)31.12.17. - 17 744 595 69 089 453 3 340 063 - 90 174 111

NET CARRYING AMOUNT31.12.16. 376 885 11 610 099 54 185 137 842 693 4 271 168 71 285 98231.12.17. 376 885 10 904 760 49 845 789 794 236 204 798 62 126 467

FOR THE YEAR 2017NOTES TO THE FINANCIAL STATEMENTS OF THE GROUP AND THE COMPANY

Valmiera Glass UK Ltd acquisition resulted in the recognition of goodwill of GBP 3 276 269 (EUR 3 826 612) in 2017 (2016: EUR 3 826 612) as acquisition costs essentially include the anticipated benefits of the business combination, revenue growth and future market growth. These and other benefits arising from the acquisition were not recognized as separate assets because they did not meet identifiable intangible assets recognition criteria.

The management has made assessment of the recoverable amount of the investment in the subsidiary and goodwill based on future cash flow projections in accordance with approved budget and applying discount rate of 8%. Cash flows after budgeted period are extrapolated with fixed rate 2% per annum. No impairment has been identified based on these calculations. Most significant assumptions used in this calculation are related to planned subsidiary's revenue, profitability and discount rate.

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7. RAW MATERIALS 31.12.17. 31.12.16. 31.12.17. 31.12.16.

EUR EUR EUR EUR

Raw materials 9 361 286 10 656 849 7 728 930 9 057 559Allowance for slow moving inventories (246 569) (176 741) (246 569) (176 741)Total 9 114 716 10 480 108 7 482 361 8 880 818

8. FINISHED GOODS 31.12.17. 31.12.16. 31.12.17. 31.12.16.

Finished goods 12 863 982 17 313 657 5 719 107 9 347 078

Allowance for excess of net realizable value over cost (161 155) (218 403) (161 155) (151 437)

Total 12 702 827 17 095 254 5 557 952 9 195 641

Group Company EUR EUR

Allowances 31 December 2015 243 778 70 082Net change (25 375) 81 355Allowances 31 December 2016 218 403 151 437Net change (57 248) 9 718Allowances 31 December 2017 161 155 161 155

9. TRADE RECEIVABLES 31.12.17. 31.12.16. 31.12.17. 31.12.16.

Trade receivables 12 261 509 10 643 452 6 014 910 4 973 973 Allowances for doubtful receivables (312 986) (524 836) (6 726) (138 525)Total 11 948 523 10 118 616 6 008 184 4 835 448

Age of receivables that are past due but not impaired: 31.12.17. 31.12.16. 31.12.17. 31.12.16.

Days past due61-90 days 18 210 239 129 - 46 015Over 90 days 103 227 309 435 103 227 69 201Total 121 437 548 564 103 227 115 216

10. OTHER RECEIVABLES 31.12.17. 31.12.16. 31.12.17. 31.12.16.

VAT overpayment 970 895 420 288 970 895 404 516State and EU grants for implemented projects 40 578 339 442 - 72 864Other receivables 3 324 595 323 789 3 182 839 215 990Allowance for doubtful receivables (24 116) (26 346) (24 116) (26 346)Total 4 311 953 1 057 173 4 129 619 667 024

Change in allowance for doubtful trade and other receivables: Group Company

EUR EUR

Allowance as of 31 December 2015 497 167 166 210Decrease due to collection (see Note 23) (1 339) (1 339)Additional allowance provided (see Note 27) 55 354 - Allowance as of 31 December 2016 551 182 164 871Decrease due to collection (see Note 23) (8 357) (2 230)Write off of Non-Recoverable Debts (205 723) (131 799)Allowance as of 31 December 2017 337 102 30 842

A number of fixed assets that have been fully depreciated are still used in operations. The total acquisition cost of these assets as at 31December 2017 amounted to EUR 15 304 311 (2016: EUR 18 700 346).

Equipment and machinery includes precious metal plates that are used in production, with net carrying amount as of 31 December 2017of EUR 7 968 466 (2016: EUR 8 409 333). According to the metal prices quoted in London Stock Exchange as at 31 December 2017 themarket price of the precious metals was EUR 9 633 823 (2016: EUR 11 715 475). The average technical depletion of the plates in 2017was 5.2 % (2016: 3.2 %).

The additions to property, plant and equipment include capitalised direct expenses related with development of fixed assets. The totalamount of expenses capitalised to property, plant and equipment was EUR 2 089 341 during 2017 (2016: EUR 373 929).

The addition to property include capitalized interest costs on loans received for specific asset acquisition. The total amount of expensescapitalized in 2017 was EUR 770 840. In 2016 the Group did not incur borrowing costs that meet the criteria for capitalization.


The Company has pledge all its property as a security for borrowings, see Note 14.

Group Company

22


11. DEFERRED EXPENSES 31.12.17. 31.12.16. 31.12.17. 31.12.16.EUR EUR EUR EUR

Precious metal plates reprocessing expenses 192 226 176 604 192 226 176 604Insurance expenses 297 237 77 530 131 498 50 030Commission short term part 981 333 334 981 333 334Other deferred expenses 287 443 201 048 66 413 172 538Total 777 887 788 516 391 117 732 506

Other deferred expenses 206 831 235 322 - - Total 206 831 235 322 - -

12. CASH AND CASH EQUIVALENTS 31.12.17. 31.12.16. 31.12.17. 31.12.16.

Cash in bank 2 633 591 2 958 952 304 401 161 062Total 2 633 591 2 958 952 304 401 161 062

13. SHARE CAPITAL

31.12.17. 31.12.16.Corvalis GmbH (previously Vitrulan International GmbH) 24,52% 36,19%P-D Glaseeiden GmbH Oschatz 26,07% 26,07%Preiss – Daimler Beatrix 7,40% 5,36%P-D Composites Handels-und Service GmbH 6,28% -P-D Management-Industries-Technologies GmbH 23,93% 23,93%Other 11,80% 8,26%

100,00% 100,00%

14. BORROWINGS FROM CREDIT INSTITUTIONS 31.12.17. 31.12.16. 31.12.17. 31.12.16.EUR EUR EUR EUR

Non-current part: Loan due within 2 to 5 years - 25 928 430 - 25 928 430 Loan due after more than 5 years - - - -

Total non-current part 0 25 928 430 - 25 928 430

Current part: Credit line 17 836 749 13 300 830 17 319 767 12 904 836 Loan 65 870 950 10 233 739 65 870 950 10 233 739

Total current part 83 707 699 23 534 569 83 190 717 23 138 575Total 83 707 699 49 462 999 83 190 717 49 067 005

The loans are secured by all assets of the Company.

As of 31 December 2017 the amount of available and not yet withdrawn credit lines was EUR 680 233 (2016: EUR 95 164) and EUR610 121 (GBP 541 318) (2016: EUR 771 985 (GBP 660 958) ).

Company

Company

In 2014 the share capital was denominated from Latvian lats to euro. Nominal value per share was determined EUR 1.40 and totalvalue of share capital was determined EUR 33,464,487. Positive difference arising from the denomination in amount of EUR546,709 was transferred to reserves of the Company.

As of 31 December 2017 and 2016 the shareholders of the Parent company, in accordance with the records maintained by theLatvian Central Depository, are as follows:

The Group is ultimately controlled by Heinz-Jürgen Preiss-Daimler and Beatrix Preiss-Daimler. Corvalis GmbH has a significantinfluence over the Company. The ultimate beneficial owner of Corvalis GmbH is Hans Peter Cordts.

Annual interest rate for loans and credit line in EUR is 1.3%-3.45% + 3M EURIBOR, in USD - 2.2%-3.45% + 3M LIBOR.The Group has signed interest rate swap contracts for certain loans. As of 31 December 2017, the fair value of interest swapagreement amounts to a liabilities of EUR 137 543 (2016: liabilities EUR 431 006), which is presented as Derivative financialinstrument in these financial statements.

As of 31 December 2017 the Group did not meet Net Debt to EBITDA financial covenant of a loan agreement as of 31 December2017. The long term portion of the loan of EUR 56 mln was reclassified to short term based on IFRS guidance due to the technicalbreach. The breach arose due to late finalization of consolidated numbers by the Group and actual EBITDA numbers being lowerthan expected. The lender did not request accelerated repayment and provided a waiver in February 2018. Management hasimproved its monitoring procedures to ensure that such circumstances do not recur.


The Company's paid-up share capital on 31 December 2017 and 2016 consists of 11,494,250 publicly listed bearer shares and12,408,955 private placement ordinary shares with equal rights. The share capital is EUR 33,464,487.

Group

FOR THE YEAR 2017

Group

The credit lines are secured by the inventories of the Company with the carrying amount as of 31 December 2017 of EUR 17 813 531 (2016: EUR 22 732 498).

23


15. FINANCE LEASE 31.12.17. 31.12.16. 31.12.17. 31.12.16.EUR EUR EUR EUR

Non-current 9 817 65 907 9 817 65 907 Current 56 453 68 807 56 453 68 804 Total 66 270 134 714 66 270 134 711

16. OTHER BORROWINGS 31.12.17. 31.12.16. 31.12.17. 31.12.16.EUR EUR EUR EUR

Non-current 1 245 965 1 620 204 - - Current 178 080 202 610 - - Total 1 424 045 1 822 814 - -

17.

31.12.17. 31.12.16. 31.12.17. 31.12.16.EUR EUR EUR EUR

Republic of Latvia (Company)Natural resource tax 8 190 7 843 8 190 7 843Social security contributions 1 240 808 479 761 1 240 808 479 761Personal income tax 673 859 283 676 673 859 283 676Enterprise risk duty 392 409 392 409

United Kingdom:Other taxes 190 819 295 047 - -

United States of AmericaCorporate income tax 70 866 - - - Personal income tax and Social security contributions 66 318 14 378 - -

Total 2 251 251 1 081 114 1 923 249 771 689

18. OTHER ACCOUNTS PAYABLE 31.12.17. 31.12.16. 31.12.17. 31.12.16. EUR EUR EUR EUR

Salary 794 736 833 980 794 736 800 583Other 152 115 167 035 4 351 12 007Total 946 851 1 001 015 799 088 812 590

19. ACCRUED LIABILITIES 31.12.17. 31.12.16. 31.12.17. 31.12.16. EUR EUR EUR EUR

Accrual for vacations 422 654 393 875 186 275 229 338Accruals for remuneration of management 412 242 411 881 412 242 411 880Accruals for client bonuses 758 111 712 794 758 111 712 794Other 480 172 586 414 65 824 65 824Total 2 073 179 2 104 964 1 422 452 1 419 836

20. RETIREMENT BENEFIT OBLIGATION

The Trustees of the Scheme invest the assets in line with the Statement of Investment Principles. The Statement of InvestmentPrinciples has been established taking into consideration the liabilities of the Scheme and the investment risk that the Trustees arewilling to accept.


In July, 2014 the Group signed a memorandum of cooperation ("MOU") with the United States Dublin City and Lawrence CountyDevelopment Agency (“the Agency"), with which the Agency undertook to provide certain support, if Group located itsmanufacturing facility in Lawrence area. Within MOU, the Agency has issued to the Company a loan at an interest rate of 1% perannum and a maturity of 7 years.

Group

The interest rate for the lease is variable 3 month EURIBOR and fixed rate 1.894%-2.65%.Net carrying amount of fixed assets purchased based on finance lease agreements as of 31 December 2017 amounted to EUR 115348 (2016: EUR 206 737).

Company

FOR THE YEAR 2017

In January, 2016 the Group signed new memorandum of cooperation with Agency, with which the Agency undertook to providefurther support, if the Group will make additional investment in its manufacturing facility in Lawrence area besides MOU specifiedinvestments in 2014. Within new MOU terms, the Agency has issued to P-D Valmiera Glass USA Corp. loan with interest rate 1% inyear with maturity date 10 years.

TAXES AND SOCIAL SECURITY CONTRIBUTIONS

Subsidiary of the Group Valmiera Glass UK Ltd (Employer) operates a defined benefit pension scheme for certain employees and for eligible employees, a scheme providing benefits based on final pensionable pay. The scheme is an HMRC registered pension scheme and is subject to standard UK pensions and tax law. Details of the benefits provided by the Scheme are set out in the Trust Deed and Rules dated 12 April 1999 (as amended).

The assets of the pension schemes are held separately from those of Valmiera Glass UK Ltd being invested by independentinvestment managers.

The appointment of Trustees is determined by the trust documentation.

On 27 May 2003, normal contributions to the defined benefit pension scheme were discontinued and members’ benefits ceased toaccrue for additional periods of service after 27 May 2003. The scheme will continue to fund benefits accrued up to 27 May 2003.

24


% p.a. 2017 2016% per Year % per Year

Discount rate 2,40 2,60Rate of increase in retirement benefit paymentFixed 2,30 2,50RPI (max 5%) 3,25 3,40CPI (max 5%) 2,05 2,15

Discount rate

2017 2016Years Years

Retiring today- Males 22,3 22,4- Females 24,2 24,1

Retiring in 20years

- Males 23,7 24,5- Females 25,7 26,4


As part of the Scheme Funding Assessment as at 31 March 2013, a recovery plan was agreed between the Trustees and the Employer to meet theshortfall over the period ending 31 August 2025. The contributions payable under this recovery plan are £850,000 per annum payable monthly.

The defined benefit pension scheme exposes the Employer to actuarial risks, such as longevity risk, interest rate risk, salary risk, market (investment)risk and currency risk.

The principal assumptions at 31 December 2017 and 2016 were:

IAS19 requires that the discount rate should reflect the current rate of return available on AA rated corporate bonds of appropriate currency andterm.

The assumed life expectations on retirement at age 65 are:

For the purpose of deriving the discount rate, zero coupon yield cureve data has been used as provided to Capita Employee Benefits by Markit Indices Limited based on the constituents of the iBoxx £ Corporates AA index. As of 31 December 2017 discount rate of 2.40% p.a. has been calculated (31December 2016: 2.60% p.a.).

The plan valuation is based on qualified actuarial valuation as of 31 December 2017. The present value of the defined benefit obligation, the related current service cost and past service cost were measured using the projected unit credit method.

FOR THE YEAR 2017

Under the Scheme Funding regime introduced by the Pensions Act 2004, the Trustees are required to carry out regular scheme funding assessmentsand establish a schedule of contributions and a recovery plan when there is a shortfall in the scheme. The recovery plan details the amount andtiming of the contributions required to eliminate the shortfall in the scheme. Scheme funding assessments are carried out at least every three years.Approximate funding updates are produced annually in years where a full scheme funding valuation is not being completed.

At each scheme funding assessment the present value of the contributions detailed in the current recovery plan is compared with any shortfallrevealed. Where the contributions under the current recovery plan are no longer sufficient to remove the shortfall by the end of period specified inthe recovery plan a new recovery plan will need to be agreed between the Trustees and the Employer. Options include increasing contributions duefrom the Employer, extending the recovery period with additional contributions paid after the expiry of the current recovery period or somecombination of the two. The affordability to the Employer of any increase in contributions is a primary factor in the agreement of any new recoveryplan.

Where the contributions are more than sufficient to remove the shortfall by the end of the recovery period, options include reducing contributionsdue, keeping the recovery period the same, or shortening the recovery period.

25


2017 2016EUR EUR

Present value of defined benefit obligations 19 070 590 19 968 931Fair value of plan assets 16 348 636 15 417 318Deficit in scheme (2 721 955) (4 551 613)

Recognition of the committed liability to make future contributions (3 518 817) (3 154 710)(6 240 772) (7 706 323)

2017 2016EUR EUR

At 1 January 2017 19 270 088 18 406 176Benefits paid (757 414) (816 417)Actuarial gains and losses 66 499 1 713 424Interest cost 491 417 665 747At 31 December 2017 19 070 590 19 968 931

The defined benefit obligations arise from plans which are wholly or partly funded.

Movements in the fair value of plan assets:2017 2016EUR EUR

At 1 January 2017 14 877 766 12 952 883Interest income 388 851 482 375Return on plan assets 881 395 1 805 695Benefits paid (757 414) (816 417)Contributions by the employer 958 038 992 781At 31 December 2017 16 348 636 15 417 318

Sensitivity of the net obligation to changes in assumptions

2017 2016EUR EUR

0.5% decrease in discount rate 20 542 588 1 167 9780.25% increase in inflation and related assumptions 19 177 665 20 103 249


The amounts included in the statement of financial position arising from the company's obligations in respect ofdefined benefit plans are as follows:

Movements in the present value of defined benefit obligations:

Liability recognised in statement of financial position

The total employer contributions to the scheme in 2017 is estimated to be £850,000. The duration of the defined benefit obligation is 17 years.

The sensitivity analysis shows the impact on the defined benefit obligation if the assumptions were changed as shown (assuming all other assumptions remain constant).

26


The fair value of the scheme assets and the present value of liabilities are as follows:31.12.17. 31.12.16.

EUR EUR

Shares/equity 5 827 125 5 279 264 Corporate bonds 8 219 966 7 539 302 Index-linked assets 2 210 250 2 223 831 Cash and cash equivalents 91 295 374 921 Total pension plan assets 16 348 636 15 417 318

Present value of pension plan liabilities (19 070 590) (19 968 932)Subsequent liabilities recognition (3 518 817) (3 154 710)Net pension plan liabilities (6 240 772) (7 706 324) Current portion 958 038 992 782 Non-current portion 5 282 734 6 713 542

Changes in the value of Pension Plan which were recognized during the reporting period:31.12.17. 31.12.16.

EUR EUR

Changes recognized as Reserves 340 385 (3 084 349)

(102 566) (183 373)Total 237 819 (3 267 722)

21. DEFERRED INCOME

31.12.17. 31.12.16. 31.12.17. 31.12.16.EUR EUR EUR EUR

EU grants 2 699 149 3 079 934 2 699 149 3 079 934 USA grants 1 518 937 1 647 535 - -

Total non-current 4 218 087 4 727 469 2 699 149 3 079 934

EU grants 380 784 380 784 380 784 380 784 USA grant 105 622 56 921 - - Total current 486 406 437 705 380 784 380 784 Total 4 704 492 5 165 174 3 079 933 3 460 718

In January 2016 the Group signed additional agreement, whereby the Agency undertook to ensure support, if theGroup, within Phase I, in established manufacturing facility till 31 December 2022 will make additional investment inamount of USD 90 000 000 and will make 425 new full time work places (Phase II).

Till 31 December 2017 the Group, within Phase I, had received support payment in amount of USD 1 900 000 (EUR 1758 934) and, within Phase II, USD 1 000 000 for factory construction and expanding financing. If the financingterms will not be met, support payment will have to be repaid.

As of 31 December 2017 the Group has invested in the Dublin plant in USD 10.7 million and created 238 jobs.

As of 31 December 2017 and 2016 the Group has complied with the requirements of the agreements related to EUfinancing.


Interest costs recognized in statement of profit and loss

Group Company

In July 2014 the Group entered into a Memorandum of Understanding („MOU”) with the City of Dublin and County ofLaurens Development Authority (USA), whereby the Authority agreed to provide certain inducements if the Grouplocates its manufacturing facility in Laurens County. As of 31 December 2015 the Group had received grant inamount of USD 900 000 (EUR 826 674) for the financing of the facility. Based on grant terms, the Group shallensure creation of 150 jobs in USA facility and investment of USD 20 000 000 until 31 December 2019. If therequirements for the grant will not be fulfilled, the grant shall be refunded.

FOR THE YEAR 2017

27


22. SALES AND BUSINESS SEGMENTS

Group

EUR

2017 2016 2017 2016 2017 2016

Sales 75 639 788 77 888 788 50 223 924 46 925 088 125 863 712 124 813 876Segment operating expenses (53 870 317) (59 709 901) (30 111 540) (36 520 190) (83 981 856) (96 233 091)Unallocated expenses (33 402 137) (21 310 537)Operating profit 21 769 472 18 178 887 20 112 384 10 404 898 8 479 719 7 270 247Interest income 320 541 735 380 Interest expenses (1 533 639) (1 609 794)

Profit before taxation 7 266 620 6 395 833 Income tax expense 1 374 462 (1 626 580)Profit for the year 8 641 082 4 769 253

Statement of financial position31.12.2017

EUR

AssetsSegment assets 41 406 387 130 417 967 171 824 353Unallocated assets 35 521 637Total assets 207 345 990

Equity and liabilitiesSegment liabilities 14 918 737 82 276 119 97 194 857Unallocated liabilities and equity 110 125 338Total equity and liabilities 207 320 195

Other information

2017, EUR Other Total

Acquisition of fixed and intangible assets 1 723 530 58 492 71 383 898 73 165 919Depreciation and amortization 2 072 873 1 066 015 7 874 245 11 013 132

EUR

2017 2016 2017 2016 2017 2016

Sales 60 305 980 61 319 089 43 732 837 40 094 083 104 038 817 101 413 172Segment operating expenses (41 141 030) (45 726 953) (24 466 839) (30 174 174) (65 607 870) (75 901 127)Unallocated expenses (33 402 137) (21 313 537)Operating profit 19 164 950 15 592 136 19 265 998 9 919 909 5 028 811 4 198 508

Interest income 311 216 832 929

Interest expenses (2 545 735) (1 290 471)

Loss from investment sale - (30 992)

Profit before taxation 2 794 292 3 709 974Income tax expense 2 620 915 (1 270 000)Profit for the year 5 415 207 2 439 974

Glass fibre fabrics

Glass fibre fabrics

Glass fibre fabrics

Based on the type of its products the Group may be divided into two main business divisions – glass fibre fabrics and non-woven products. Those divisions serve as the basis to report the primary segments of the Group – business segments.

Statement of comprehensive income

Glass fibre non-woven products

Total


Glass fibre fabrics



Company


Total

Total

Statement of comprehensive income

28



Statement of financial position31.12.2017

EUR

AssetsSegment assets 35 485 754 104 538 939 140 024 693Unallocated assets 36 427 480Total assets 176 452 173

Equity and liabilitiesSegment liabilities 9 023 901 56 397 092 65 420 992Unallocated liabilities and equity 111 031 181Total equity and liabilities 176 452 173

Other information

2017, EUROther Total

Acquisition of fixed and intangible assets 1 657 072 58 492 3 744 668 5 460 231Depreciation and amortization 1 831 261 363 170 7 848 245 10 042 675

Net sales by geographical area:

2017 2016 2017 2016EUR EUR EUR EUR

European Union 87 807 354 92 235 548 72 581 470 77 690 488North America 12 542 417 16 540 072 10 367 549 10 933 637CIS 5 529 133 5 450 884 4 570 376 5 434 977Other countries 19 984 808 10 587 372 16 519 422 7 354 070Total 125 863 712 124 813 876 104 038 817 101 413 172

Company



Group

TotalGlass fibre fabrics

Glass fibre fabrics

28


23. OTHER OPERATING INCOME 2017 2016 2017 2016EUR EUR EUR EUR

Sale of raw materials 264 933 187 230 264 933 187 230 Profit from sales of fixed assets - - 56 689 - Insurance indemnification 32 770 18 541 32 770 18 541 Income from rent of premises 44 280 32 641 44 280 32 641 Recovered bad debts (see Note 10) 2 230 1 339 2 230 1 339 Income from EU funding 923 355 687 124 396 361 477 194 Management services - - 889 198 859 441 Other 620 923 134 728 55 077 500 493 Total 1 888 490 1 061 603 1 741 537 2 076 879

24. RAW MATERIALS AND COSUMABLES 2017 2016 2017 2016EUR EUR EUR EUR

Raw materials and other costs 50 566 343 55 303 421 42 429 059 47 235 684 Natural gas 4 371 696 3 650 292 3 995 862 3 279 036 Electricity 5 790 860 6 894 871 5 143 395 6 175 382 Oxygen 867 161 776 345 867 161 776 345 Precious metal plates processing costs 696 611 684 438 696 611 684 438 Total 62 292 671 67 309 367 53 132 089 58 150 885

25. PERSONNEL EXPENSES 2017 2016 2017 2016EUR EUR EUR EUR

Salaries 20 849 504 19 834 070 13 913 138 13 837 773 State social security contributions 4 421 267 4 039 308 3 692 871 3 430 551 Illness and vacation expenses 2 203 652 1 959 856 2 165 085 1 867 961 Employee insurance 357 921 340 348 98 469 92 116 Other 562 927 508 807 177 404 412 416 Total 28 395 270 26 682 389 20 046 966 19 640 817

2017 2016 2017 2016EUR EUR EUR EUR

Average number of employees 1 435 1 268 1 063 1 085

26. DEPRECIATION AND AMORTISATION 2017 2016 2017 2016EUR EUR EUR EUR

Fixed asset depreciation based on straight line method 10 566 949 10 106 140 9 602 264 8 879 066 Depreciation of precious metal plates 440 411 354 436 440 411 354 436 Intangible asset amortization (see Note 4) 116 979 87 597 111 206 87 597 Total 11 124 339 10 548 173 10 153 882 9 321 099


Group CompanyFOR THE YEAR 2017

30


27. OTHER OPERATING EXPENSES 2017 2016 2017 2016EUR EUR EUR EUR

Transportation 8 462 177 8 479 965 6 382 541 6 544 633 Sales commission 1 453 362 1 435 079 1 346 408 1 306 145 Service costs 1 742 291 1 380 424 1 685 901 1 726 088 Spare parts 1 585 913 1 547 305 1 335 907 1 200 285 Repair expenses 659 991 624 780 530 922 479 590 Training and qualification of employees 72 318 641 091 72 318 641 055 Insurance 707 903 629 033 376 313 387 360 Business trips 687 431 779 349 353 627 446 835 Labour safety and specific clothing 361 141 312 245 280 876 236 533 Research and development expenses 90 225 260 501 44 240 193 690 Communication 173 284 204 761 92 597 109 069 Rent 838 964 740 053 473 937 411 616 Office expenses 51 470 63 002 22 224 26 431 Selling expenses 581 880 219 917 431 125 188 976 Property tax 240 095 199 929 90 860 77 397 Allowance for doubtful receivables (Note 10) - 55 354 - - Audit fees 73 620 70 837 53 212 40 103 Other 204 699 308 837 421 369 488 036 Total 17 986 763 17 952 462 13 994 376 14 503 842

28. INTEREST AND SIMILAR INCOME 2017 2016 2017 2016EUR EUR EUR EUR

Profit from foreign currency exchange rate fluctuations - 279 978 - 387 554 Interest income 27 077 121 902 17 753 111 875 Net gain on changes in fair value of derivative 293 463 333 500 293 463 333 500 Total 320 541 735 380 311 216 832 929

29. INTEREST AND SIMILAR EXPENSES 2017 2016 2017 2016EUR EUR EUR EUR

Loss from foreign currency exchange rate fluctuations 39 514 - 1 202 511 - Interest expenses 1 359 917 1 394 575 1 311 934 1 286 208 Paid fines 31 642 31 846 31 289 4 263 Sale non-controling - - - 30 992 Interest expenses related to retirement benefit 102 566 183 373 - - Total 1 533 639 1 609 794 2 545 735 1 321 463

Other services received from the auditors of the financial statements amount to EUR 12 000 in 2017.


Group Company

FOR THE YEAR 2017

31


30. CORPORATE INCOME AND DEFERRED TAX 2017 2016 2017 2016EUR EUR EUR EUR

Corporate income tax and deferred tax recognized in profit or loss:

Corporate income tax 485 599 - - - Deferred tax (1 860 061) 1 626 580 (2 620 915) 1 270 000 Total recognized in profit or loss (1 374 462) 1 626 580 (2 620 915) 1 270 000

Deferred tax recognized in reserves:Deferred tax on retirement benefit revaluation (68 077) (617 924) - - Revaluation of deferred tax assets and liabilities related to foreign operation (59 874) - - - Changes in deferred tax recognized in reserves (127 951) (617 924) - - Total (1 502 413) 1 008 656 (2 620 915) 1 270 000

30(b) Reconciliation of accounting profit to tax charges:2017 2016 2017 2016

EUR EUR EUR EUR

Profit before tax 7 266 620 6 395 833 2 794 292 3 709 974 Expected tax charge, applying parent company tax rate of 15% (1 089 993) (959 375) (419 144) (556 496)Tax effect of tax rate in United Kingdom 19.56% (2016: 20%) (116 680) (126 956) - - Tax effect of tax rate in United States of America 40% (391 223) (48 281) - - Tax effect of non-deductible items (3 634) (139 665) - (94 662)Tax credit received for new technological equipment* - 372 433 - 372 433 Non-taxable income and tax credits 672 137 416 - 60 461 Tax effect of tax rate changes 3 065 659 - 3 040 059 - Effect of expired tax assets - (1 051 098) - (1 051 098)Other (90 339) 188 946 - (639)Corporate income tax and deferred tax 1 374 462 (1 626 580) 2 620 915 (1 270 001) Effective tax rate -19% 25% -94% 34%

30(c) Deferred taxes as of end of the year: 2017 2016 2017 2016

EUR EUR EUR EUR

Deferred tax liabilities:Temporary difference on depreciation of fixed assets 1 286 520 5 786 680 - 5 078 791 Total deferred tax liabilities 1 286 520 5 786 680 - 5 078 791

Deferred tax assets:Temporary difference on accruals (33 352) (532 745) - (237 706)Allowance for inventories (60 034) (69 201) - (26 511)Tax loss carry forward* (516 303) (1 510 999) - (1 054 686)Tax discount - (1 138 973) - (1 138 973)Temporary difference on retirement benefit (1 185 747) (1 541 265) - - Total deferred tax assets (1 795 436) (4 793 183) - (2 457 876)

Net deferred tax (asset) / liability (508 916) 993 497 - 2 620 915

Unrecognized deferred tax assets** - (1 923 581) - -

Net recognized deferred tax (asset) / liability (508 916) (930 084) - 2 620 915

Deferred tax assets presented in assets of statement of financial position (1 185 747) (1 923 581) - - Deferred tax liabilities presented in liabilities of statement of financial position 676 831 2 917 078 - 2 620 915

* Deferred tax assets on tax losses can be used as follows:

2017 2016 2017 2016Year of expiry EUR EUR EUR EUR2024 140 535 140 535 - - 2025 312 226 312 226 - - Unlimited 63 542 1 058 238 635 542 1 054 686 Total 516 303 1 510 999 635 542 1 054 686


Group Company

* The tax base of new technological equipment purchased by the Company in 2016 was calculated by multiplying the acquisition cost with acoefficient of 1.5. If the equipment is disposed within 5 years from acquisition, taxable income in the year of disposal should be increased bythe amount of credit previously recognized.

FOR THE YEAR 2017

32


31. EARNINGS AND DIVIDEND PER SHARE 2017 2016 2017 2016EUR EUR EUR EUR

Profit for the year 8 216 113 4 806 954 5 415 207 2 439 974Average number of shares outstanding 23 903 205 23 903 205 23 903 205 23 903 205Earnings per share 0,3437 0,2011 0,2265 0,1021

Dividends paid - 1 645 663 - 1 645 663Dividends per share - 0,0688 - 0,0688

32. MANAGEMENT REMUNERATION 2017 2016 2017 2016EUR EUR EUR EUR

Members of the Council:Compensation 226 770 377 504 226 770 377 504 Social security payments 14 130 14 742 14 130 14 742

Members of the Board:Compensation 672 063 451 142 501 148 325 917 Social security payments 151 551 45 205 95 542 37 441

Other management:Salary 1 112 643 1 104 927 864 872 738 854 Social security payments 224 478 204 622 203 957 174 296 Total 2 401 635 2 198 142 1 906 419 1 668 754

In 2017 and 2016 the Group has not granted or received any loans from the members of Council, Board or other management.

33. TRANSACTIONS AND BALANCES WITH RELATED PARTIES

33(a) Loans to related companies

33(b) Borrowings from related companies

Gada % likme 31.12.2017 31.12.2016EUR EUR

GroupPrivate persons 4% 1 295 000 - Entities controlled by the parties controlling the Group 4% 1 295 000 -

2 590 000 -

CompanyPrivate persons 4% 1 295 000 - Entities controlled by the parties controlling the Group 4% 1 555 884 - Subsidiaries 2.5%-4% 2 316 705 2 700 000

5 167 589 -

33(c) Receivables from and payables to related parties 31.12.2017 31.12.2017 31.12.2016 31.12.2016

GroupReceivables Payables Receivables Payables

EUR EUR EUR EURControlling partiesP-D Glasseiden Oschatz GmbH - 1 236 838 869 418 454 615 P-D Management Industries –Technologies - 47 510 13 587 182 436

Entities controlled by the parties controlling the Group

P-D Preiss –Daimler Consulting - 110 257 - 38 689 P-D Tatneft Fiberglas Alabuga - (180) - (489)P-D Industriegesellschaft GmbH Bratendorf 241 226 - 563 104 057 P-D Interglas Technologies GmbH - - 5 242 - P-D Refractories GmbH - 14 545 - 14 545 P-D Refractories CZ a.s - 90 372 - 18 444 Preiss-Daimler FibreGlass AB 95 865 - 82 321 2 288

Total 337 091 1 499 342 971 131 814 585


Group Company

The Company has provided credit line for its subsidiary Valmiera Glass USA Corporation for financing its working capital. Used amountof the credit line as of 31 December 2017 was EUR 13 893 004 and EUR 14 657 151 (USD 17 111 088) (2016: EUR 3 798 620 (USD 4 004125)). Interest rate on the credit line is 3 month LIBOR +1.8% per year and it is not secured.

FOR THE YEAR 2017

33


31.12.2017 31.12.2017 31.12.2016 31.12.2016Company

Receivables Payables Receivables Payables

EUR EUR EUR EURControlling partiesP-D Glasseiden Oschatz GmbH - 880 837 869 419 454 615 P-D Management Industries –Technologies - 19 250 13 586 182 436

-

Entities controlled by the parties controlling the Company

P-D Preiss –Daimler Consulting - 41 221 - 38 689 P-D Tatneft Fiberglas Alabuga - (180) - (489)P-D Industriegesellschaft GmbH Bratendorf 223 471 - 563 104 057 P-D Interglas Technologies GmbH - - 5 242 - P-D Refractories GmbH - 14 545 - 14 545 P-D Refractories CZ a.s - 90 372 - 18 444 Preiss-Daimler FibreGlass AB 95 865 - 82 326 - Total other related parties 319 336 1 046 045 971 136 812 297

SubsidiariesValmiera Glass UK Limited 667 968 310 948 1 226 751 725 452 P-D Valmiera Glass USA Corp 22 981 624 862 940 - - non-current portion - - 3 123 773 - current portion - - 4 043 979 72 204 Valmiera Glass Trading USA Corp - 15 894 - 18 974 Total subsidiaries 23 649 592 1 189 782 8 394 503 816 630

Total 23 968 928 2 235 827 9 365 639 1 628 927

33(d) Transactions with related parties 2017 2016Group EUR EUR

Sale of goods 7 019 288 7 059 210 Services provided 889 580 164 403 Purchase of fixed and intangible assets (484 650) (1 948 445)Purchase of goods (756 876) (2 609 016)Sales commission (1 346 408) (1 528 571)Services received (1 528 912) (1 300 537)

Company 2017 2016EUR EUR

SubsidiariesSale of goods 17 337 548 15 825 105 Purchase of goods (1 817 582) (2 372 485)Services provided 915 945 1 112 951 Services received (715 379) (600 111)Purchase of fixed and intangible assets (73 367) (168 909)Interest expenses (117 906) (163 016)Interest income 8 425 97 303

Other related partiesSale of goods 7 019 288 7 059 210 Services provided 721 505 164 403 Purchase of fixed and intangible assets (60 500) (1 948 445)Purchase of goods (756 876) (2 503 076)Sales commission (1 346 408) (1 528 571)Services received (1 255 912) (1 426 476)


The Group has not recognized any allowances in respect of receivables from related parties.

FOR THE YEAR 2017

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34. FINANCIAL RISK MANAGEMENT

Market risks

Interest rate risk

Interest rate analysis

Currency % rate increase Impact on

statement of profit or loss

% rate increase Impact on

statement of profit or loss

EUR +1,0 (535 348) +1,0 (103 299)USD +1,0 (119 653) +1,0 (19 659)

Foreign currency risk

Analysis of assets exposed to currency risk:

Group 31.12.2017 EUR USD GBP KopāTrade receivables 5 259 572 5 087 589 1 938 453 12 285 614

Cash and cash equivalents 668 403 836 145 1 129 043 2 633 591 Borrowings and financial lease obligations (74 502 946) (11 965 339) (516 982) (86 985 267)Trade and other payables (19 249 692) (14 575 256) (797 904) (34 622 852)Total net assets (87 824 663) (20 616 861) 1 752 610 (106 688 914)% from net assets 82% 19% -2% 100%

CurrencyExchange rate fluctuation

Impact on statement of profit or loss

Exchange rate fluctuation


% EUR % EURUSD +10% 2 061 686 +10% 20 885 USD -10% (2 061 686) -10% (20 885)GBP +10% (175 261) +10% (595 669)GBP -10% 175 261 -10% 595 669

Company 31.12.2017 EUR USD GBP KopāLoans issued 11 893 004 14 267 563 - 26 160 567 Trade receivables 24 889 523 5 087 589 - 29 977 112 Cash and cash equivalents 143 445 160 898 58 304 401 Borrowings and financial lease obligations 76 270 824 11 965 339 - 88 236 163 Trade and other payables 18 510 900 1 321 292 - 19 832 192 Total net assets 131 707 696 32 802 681 58 164 510 435 % from net assets 80% 20% 0% 100%

Currency Exchange rate fluctuation


Exchange rate fluctuation


% EUR % EURUSD +10% 3 280 268 +10% 870 550 USD -10% (3 280 268) -10% (870 550)GBP +10% (6) +10% (998)GBP -10% 6 -10% 998

The Group has loans with variable EURIBOR and LIBOR interest rate from credit institutions. Therefore it is exposed to any changes in interest rates.

The Group operates internationally and performs transactions in EUR, USD and GBP. Group is mainly is exposed to foreign currency risk arisingfrom USD and GBP fluctuations. Approximately 15% of total sales in 2017 resulted from contracts denominated in USD (2016: 14%).

The financial assets and liabilities of the Group, which are exposed to currency risk, are loans, cash and cash equivalents, trade receivablesand payables.The net position in USD and GBP is directly exposed to a possible fluctuations in the exchange rate thus resulting in direct effect to theGroup’s profit before tax.


Main financial instruments of the Group are loans, finance lease, cash and its equivalents. The primary objective of these financialinstruments is to ensure the necessary financing for the Group. The Group also has other financial instruments, which arises due to itsoperating activities, i.e., trade receivables and payables. The Group also uses derivative financial instruments to minimize interest and foreigncurrency rate risks.

31.12.2017

Main financial risks which arise as a result of use of the financial instruments are interest, currency, credit and liquidity risks.

FOR THE YEAR 2017

To reduce potential adverse effects of USD currency fluctuations, the Group uses derivative financial instruments for significant transactions.As of 31 December 2017 the Group did not have open derivative contracts for foreign currency exchange.

31.12.2017 31.12.2016

31.12.2017 31.12.2016

31.12.2016

The Group has signed two interest rate swap contracts for its loans to minimize the risks associated with variable interest rate fluctuations.Based on the contracts, the Group has agreed to exchange the floating 3 month EURIBOR interest payments and fixed payments calculatedon agreed notional principal amount. The fair value of interest rate swaps at the end of the reporting period is determined by discounting thefuture cash flows using the curves at the end of the reporting period. The fair value of financial instruments as of 31 December 2017 is liabilityin the amount of EUR 101 434 (2016: EUR 362 769) and EUR 36 109 (2016: EUR 68 237).

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AS VALMIERAS STIKLA ŠĶIEDRANOTES TO THE FINANCIAL STATEMENTS OF THE GROUP AND THE COMPANYFOR THE YEAR 2017

Credit risk

Liquidity risk

The credit risk on cash and cash equivalents is limited because the counterparties are banks with adequate credit history.The Group does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settledby delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will alwayshave sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risk damage to the Group’s reputation. Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through credit line. During the reportingperiod EUR 14.17 million credit line was available assigned by SEB Banka AS (GBP 1 million and EUR 9 million), and EUR 4 million credit line wasavailable assigned by AS Dansk Bank to finance short-term working capital.

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractualobligations, and arises principally from the Group’s trade receivables (including related parties) and cash at bank, which as at 31 December2017 amounted to EUR 12 285 614 and EUR 2 633 5912 (2016: respectively EUR 11 089 748 and EUR 2 958 952).The Group has significant exposure of credit risk with its foreign customers. The Group’s policy is to ensure that sales of products are carriedout with customers having appropriate credit history. Some of the trade receivables are insured. The Group has also set credit limits for eachcustomer. Customers from countries with increased risk are usually required to pay in advance.The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.The main components of this allowance are a specific loss component that relates to exposure of each customer.

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Financial Instruments as of 31 December 2017

Group Receivables from

customers

Financial liabilities shown at

amortized cost


shown at fair value

Financial instruments to which IAS 39 does not

apply

Total

Financial assetsReceivables from customers 12 285 614 - - - 12 285 614 Other debtors 4 311 953 - - - 4 311 953 Cash and equivalents 2 633 591 - - - 2 633 591 Total financial assets 19 231 158 - - - 19 231 158

Financial liabilitiesFinance lease - - - 248 605 248 605 Borrowings - 87 982 627 - - 87 982 627 Trade payables - 34 622 852 - - 34 622 852

Taxes and social insurance contribution - 2 251 251 - - 2 251 251

Other liabilities - 946 851 - - 946 851 Derivative financial instruments - - 137 543 - 137 543 Total financial liabilities - 125 803 581 137 543 248 605 126 189 729

Repayment terms of financial liabilities are following

31.12.2017 Less than 6 months

6-12 months From 1-2 years From 2-5 years

More than 5 years

Total

EURBorrowings - 27 147 161 24 055 137 8 549 270 39 431 401 99 182 969 Finance lease - 516 940 209 238 - - 726 178 Interest payable - 116 840 300 720 151 437 3 826 078 4 395 075 Trade accounts payable and other liabilities 39 894 133 - - - - 39 894 133 Total EUR 39 894 133 27 780 941 24 565 095 8 700 707 43 257 479 144 198 355



More than 5 years

Total

EURBorrowings 5 313 484 18 423 694 10 004 967 16 733 904 809 764 51 285 813 Finance lease 84 614 72 626 155 071 97 400 - 409 711 Interest payable 651 975 524 590 878 234 663 805 22 768 2 741 372 Trade accounts payable and other liabilities 15 830 560 - - - - 15 830 560 Total EUR 21 880 633 19 020 910 11 038 272 17 495 109 832 532 70 267 456

Financial Instruments as of 31 December2017

Company Receivables from

customers

Financial liabilities shown at

amortized cost


shown at fair value

Financial instruments to which IAS 39 does not

apply

Total

Financial assetsLoans to related parties 30 358 012 - - - 30 358 012 Receivables from customers 6 327 520 - - - 6 327 520 Other debtors 4 129 619 - - - 4 129 619 Cash and equivalents 304 401 - - - 304 401 Total financial assets 41 119 551 - - - 41 119 551

Financial liabilitiesFinance lease - - - 248 605 248 605 Borrowings - 82 819 969 - - 82 819 969 Borrowings from related parties - 2 850 884 - - 2 850 884 Trade payables - 18 642 410 - - 18 642 410

Taxes and social insurance contribution - 1 923 249 - - 1 923 249

Other liabilities - 799 088 - - 799 088 Derivative financial instruments - - 137 543 - 137 543 Total financial liabilities - 107 035 599 137 543 248 605 107 421 748

Repayment terms of financial liabilities are following:



More than 5 years

Total

EURBorrowings - 27 147 161 24 055 137 8 549 270 39 431 401 99 182 969 Finance lease - 151 913 96 692 - - 248 605 Interest payable - 116 840 300 720 151 437 3 826 078 4 395 075 Trade accounts payable and other liabilities 21 755 441 - - - - 21 755 441 Total EUR 21 755 441 27 415 914 24 452 549 8 700 707 43 257 479 125 582 090



More than 5 years

Total

EURBorrowings 5 110 874 18 027 700 12 502 357 16 126 074 - 51 767 005 Finance lease 84 614 72 626 155 071 97 400 - 409 711 Interest payable 635 773 522 564 862 032 627 356 - 2 647 725 Trade accounts payable and other liabilities 14 328 599 - - - - 14 328 599 Total EUR 20 159 860 18 622 890 13 519 460 16 850 830 - 69 153 040


Based on the assessment of the management, the carrying amount of the financial instruments of the Group approximates their fair values.

37


Capital management

31.12.2017 31.12.2016 31.12.2017 31.12.2016EUR EUR EUR EUR

Borrowings 87 804 547 51 285 813 87 987 558 51 767 005 Cash and cash equivalents (2 633 591) (2 958 952) (304 401) (161 062)Net debt 85 170 955 48 326 861 87 683 157 51 605 943 Equity 67 111 724 54 890 268 60 760 941 55 345 735 Total equity 152 282 680 103 217 129 148 444 099 106 951 678 Debt to equity 127% 88% 144% 93%

35. CONTINGENT LIABILITIES AND COMMITMENTS

(a) Commitments for purchase of inventory and fixed assets

31.12.2017 31.12.2016 31.12.2017 31.12.2016EUR EUR EUR EUR

Within 1 year 5 643 147 35 089 422 - 12 078 612 2 to 5 years - 1 503 509 - 1 503 509 Total 5 643 147 36 592 931 - 13 582 121

(b) Operating lease

31.12.2017 31.12.2016 31.12.2017 31.12.2016EUR EUR EUR EUR

Within 1 year 838 964 468 808 473 937 357 076 2 to 5 years 1 460 108 1 646 516 632 457 1 199 586 More than 5 years 123 485 154 505 123 485 154 505 Total 2 422 557 2 269 829 1 229 879 1 711 167

(c) Cooperation Memorandum with development agency of Dublin city and Lawrence region (USA)

- invest additional USD 90,000,000 in the establishment till 31 December 2018;- create additional 425 full time jobs and maintain 20 years after 31 December 2022.

36. SUBSEQUENT EVENTS


The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern and to maximize the return tostakeholders through the optimization of the debt and equity balance. The capital structure of the Group consists of borrowings, which aredisclosed in Note 14, 16 and 33(b), and items presented within equity in the statement of financial position. The Group’s board manage theGroup’s capital structure and make adjustments to it in light of changes in economic conditions. The capital structure is reviewed on anongoing basis.

Group Company

FOR THE YEAR 2017

In July 2014 the Group entered into a Memorandum of Understanding („MOU”) with the City of Dublin and County of Laurens DevelopmentAuthority (USA), whereby the Authority agreed to provide certain inducements if the Group locates its manufacturing facility in LaurensCounty.

In January 2016 the Group signed additional agreement to MOU, within which the Agency undertook to provide support, if the Group, withinPhase I, in made manufacturing facility till 31 December 2022 will make additional investments.

The Company signed agreement with realated party P-D management Industries-Technologies GmbH on 15 January 2018 for sale of 9% ofValmiera Glass USA Corp. shares for total amount of EUR 2 400 000.

As of the last day of the reporting year until the date of signing these financial statements there have been no other events requiringadjustment of or disclosure in the financial statements or notes thereto.

At 31 December 2017 the Group have commitment for purchase of equipment, software and inventories for which contracts have beensigned but not yet fulfilled and therefore not recognized in the financial statements.

Group Company

The Group as a lessee has entered in operating lease agreements for premises, land and equipment. Total lease expenses in 2017 were EUR838 694 (2016: EUR 515 499). As of 31 December 2017, amounts payable based on signed lease agreements were as follows:

Group Company

According to MOU, Group has committed to Phase I:

According to signed additional agreement to MOU, Group has committed to Phase II:- create 150 full time jobs until 31 December 2019 and maintain for 10 years.- invest USD 20 000 000 in the establishment and development of manufacturing facility till 31 December 2019;- establish facility in Laurens County;

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